Agricultural and Social Infrastructure included in Priority Sector Lending
Updated: Apr 24, 2015 02:47:50pm
New Delhi, April 24 (KNN) Reserve Bank of India on Thursday revised its norms in the area of Priority Sector Lending (PSL), including bank loans to food and agro processing units as a part of agriculture and dispensing with present distinction between direct and indirect agriculture.
Lending to the agriculture sector will include farm credit (which will include short-term crop loans and medium/long-term credit to farmers), agriculture infrastructure and ancillary activities.
Loans to sectors such as social infrastructure, renewable energy and medium enterprises will also be treated as PSL.
For the newly introduced sectors, a medium enterprise loan will be considered under PSL if the total investment in plant and machinery is between Rs 5 and 10 crore, while loans of up to Rs 5 crore to build schools, health care facilities, drinking water facilities and sanitation facilities in tier II to tier VI centres will qualify for PSL tag under social infrastructure.
In case of renewable energy, a loan of up to Rs 15 crore for power generators from solar, biomass, wind, micro-hydel and non-conventional energy-based public utilities like street lighting systems, and remote village electrification will come under PSL.
Also, for large-ticket education, under the new norms loans, up to Rs 10 lakh, including vocational courses, irrespective of the sanctioned amount, will be reckoned as part of priority sector lending.
Bank advances to microfinance institutions (MFIs) for lending to individuals, members of self-help groups and joint liability groups will also qualify as PSL, provided the MFIs meet the norms prescribed for micro lending. MFIs have to furnish certificates from a chartered accountant, stating these guidelines have been followed every quarter.
Now, banks have to achieve a sub-target of 18 per cent for agriculture (13.5 per cent direct lending and 4.5 per cent indirect lending) within a target of 40 per cent of average net bank credit (ANBC). Indirect agriculture includes loans to companies engaged in the agriculture sector whereas direct agriculture refers to individual farmers or groups directly engaged in agriculture and allied activities.
Farm lending will include loans to build agriculture infrastructure such as storage, as well as those for soil conservation and watershed development, loans for ancillary activities such as setting up agro clinics and agribusiness centres.
A target of 7.5 per cent of ANBC has been prescribed for micro-enterprises, to be achieved in a phased manner – 7 per cent by March 2016 and 7.5 per cent by March 2017.
The RBI said priority sector non-achievement will be assessed on quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis as at present ensuring that banks give loans to the PSL throughout the year and not rush towards the year end to achieve the targets. (KNN/SS)
Lending to the agriculture sector will include farm credit (which will include short-term crop loans and medium/long-term credit to farmers), agriculture infrastructure and ancillary activities.
Loans to sectors such as social infrastructure, renewable energy and medium enterprises will also be treated as PSL.
For the newly introduced sectors, a medium enterprise loan will be considered under PSL if the total investment in plant and machinery is between Rs 5 and 10 crore, while loans of up to Rs 5 crore to build schools, health care facilities, drinking water facilities and sanitation facilities in tier II to tier VI centres will qualify for PSL tag under social infrastructure.
In case of renewable energy, a loan of up to Rs 15 crore for power generators from solar, biomass, wind, micro-hydel and non-conventional energy-based public utilities like street lighting systems, and remote village electrification will come under PSL.
Also, for large-ticket education, under the new norms loans, up to Rs 10 lakh, including vocational courses, irrespective of the sanctioned amount, will be reckoned as part of priority sector lending.
Bank advances to microfinance institutions (MFIs) for lending to individuals, members of self-help groups and joint liability groups will also qualify as PSL, provided the MFIs meet the norms prescribed for micro lending. MFIs have to furnish certificates from a chartered accountant, stating these guidelines have been followed every quarter.
Now, banks have to achieve a sub-target of 18 per cent for agriculture (13.5 per cent direct lending and 4.5 per cent indirect lending) within a target of 40 per cent of average net bank credit (ANBC). Indirect agriculture includes loans to companies engaged in the agriculture sector whereas direct agriculture refers to individual farmers or groups directly engaged in agriculture and allied activities.
Farm lending will include loans to build agriculture infrastructure such as storage, as well as those for soil conservation and watershed development, loans for ancillary activities such as setting up agro clinics and agribusiness centres.
A target of 7.5 per cent of ANBC has been prescribed for micro-enterprises, to be achieved in a phased manner – 7 per cent by March 2016 and 7.5 per cent by March 2017.
The RBI said priority sector non-achievement will be assessed on quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis as at present ensuring that banks give loans to the PSL throughout the year and not rush towards the year end to achieve the targets. (KNN/SS)
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